Robinhood’s Tenev says retail brokerage firm not interested in selling itself despite difficulties

Vlad Tenev, CEO and co-founder of Robinhood Markets, Inc., is shown on a screen during his company’s IPO on the Nasdaq Market site in Times Square in New York City, USA, on 29 July 2021.

Brendan McDermid | Reuters

Robinhood CEO Vlad Tenev said on Wednesday that the retail brokerage is not looking to be acquired despite announcing major layoffs after another quarter of declining active users.

“In a word: no,” Tenev said on an investor call when asked about the possibility of another company buying it. “I think we’re in a great position as an independent company. I love us as an independent company.”

In May, FTX CEO Sam Bankman-Fried disclosed a stake in Robinhood, sparking speculation about a potential takeover bid by the crypto-focused brokerage firm. Bankman-Fried has since said that FTX is not looking to buy Robinhood outright.

Tenev said that Robinhood was looking at possible acquisitions of its own. The company reported $6 billion of cash on its balance sheet at the end of the quarter.

“In fact, we see opportunities, particularly in this market environment, to take advantage of the balance sheet that we have … to acquire companies that accelerate our roadmap,” Tenev said.

The call from Robinhood investors came a day after the company announced it was laying off 23% of its workforce. The company also reported a smaller-than-expected loss for the second quarter, but monthly active users were down and revenue was down more than 40% year over year.

Shares of Robinhood rose 11.7% on Wednesday after the layoff announcement. Several Wall Street analysts said the company’s cost-cutting efforts could be a boost for the stock.

Robinhood cut its full-year expense guidance by about $290 million, including about a $70 million decrease in expected stock-based compensation. Tenev said the company plans to post positive adjusted EBITDA, a measure of profitability that excludes certain costs such as interest and taxes, by the end of the year.

The company pointed to Federal Reserve rate hikes as a source of interest income growth. Chief Financial Officer Jason Warnick estimated that each quarter-percentage-point rate increase translates to about $40 million in annual revenue for Robinhood.

“The precise benefit of rate hikes will depend on how customers’ balances and rates change over time,” Warnick said.

The CFO also said that Robinhood’s assets under custody were back above $70 billion in July after declining in the second quarter.

Despite Wednesday’s rally, Robinhood shares are still down nearly 42% on the year and more than 70% from where their IPO price was last year.

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